Mainstream bid with music

Company tries to move beyond e-commerce with new service

Associated Press

Associated Press

Published 5:50 pm, Thursday, June 12, 2014

This product image released by Amazon features the company's new Prime Music streaming service. Starting Thursday, June 12, 2014, Amazon.com Inc. will offer more than a million tracks for ad-free streaming and download to Kindle Fire tablets as well as to computers and the Amazon Music app for Apple and Android devices. (AP Photo/Amazon) ORG XMIT: LA112

This product image released by Amazon features the company's new...

This product image released by Amazon features the company's new Prime Music streaming service. Starting Thursday, June 12, 2014, Amazon.com Inc. will offer more than a million tracks for ad-free streaming and download to Kindle Fire tablets as well as to computers and the Amazon Music app for Apple and Android devices. (AP Photo/Amazon) ORG XMIT: LA113

This product image released by Amazon features the company's new...

This product image released by Amazon features the company's new Prime Music streaming service. Starting Thursday, June 12, 2014, Amazon.com Inc. will offer more than a million tracks for ad-free streaming and download to Kindle Fire tablets as well as to computers and the Amazon Music app for Apple and Android devices. (AP Photo/Amazon) ORG XMIT: LA114

Amazon's newly announced music streaming service is yet another attempt by the company to move beyond e-commerce and infuse itself into the daily lives of Americans with an increasing number of offerings — including grocery delivery and streaming TV.

The announcement comes just days ahead of the expected unveiling of the company's first smartphone. Starting Thursday, Amazon.com Inc. will offer more than a million tracks for ad-free streaming and download to Kindle Fire tablets as well as to computers and the Amazon Music app for Apple and Android devices. The service, called Prime Music, is likely to be integrated with an Amazon smartphone expected to be previewed on Wednesday.

People who pay $99 a year for an Amazon Prime membership can listen to tens of thousands of albums from artists including Beyonce, The Lumineers and Macklemore & Ryan Lewis for no extra cost. By adding music, Amazon is hoping to hook new customers and retain existing ones on its Prime free-shipping plan, which also allows subscribers to watch streams of movies and TV shows and gives Kindle owners a library of books they can borrow once a month.

But the service has far fewer songs than services like Spotify or Rhapsody, and no deal with top-ranked Universal Music Group. Wedbush analyst Michael Pachter said the service is not likely to make a big impact on Prime membership. He said Prime members are likely to already use other streaming services so there is not much of a reason to switch to Amazon's service.

"Very few people are going to use it, like Prime Instant Video, very few people even know that exists," he said. "We are Prime members because we want free shipping."

Steve Boom, Amazon's vice president of digital music, said the service will pay for itself and isn't part of the reason why the company raised the price of Prime from $79 in March — a move Amazon said would cover higher shipping costs. Instead, the company will benefit because Prime members tend to buy more from Amazon and remain loyal customers.

"If they come to Amazon for their music needs, they become better and longer-term Amazon customers, and we think that's a good thing," Boom said.

The deal comes on the heels of Apple Inc.'s announcement that it is purchasing headphone and music-streaming company Beats for $3 billion and is a further acknowledgement of the rise in popularity of streaming and the decline of digital downloads. U.S. sales of downloaded songs slipped 1 percent last year to $2.8 billion while streaming music revenue surged 39 percent to $1.4 billion, according to the Recording Industry Association of America.